Author: JESSE COGHLAN, COINTELEGRAPH; Translation: 松雪, Blocking
FTX has filed a lawsuit against a former regulatory and compliance chief of the exchange, accusing him of making a series of payments in an attempt to prevent employees from reporting issues with the exchange.
On June 27, FTX filed a lawsuit against Daniel Friedberg, who held multiple positions including Chief Regulatory Officer of FTX, Chief Compliance Officer of FTX US, and General Counsel of Alameda Research.
FTX claims that Friedberg was a “middleman” for FTX co-founder Sam Bankman-Fried – according to the complaint, Sam Bankman-Fried’s father urged that Friedberg be given an important role:
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“Sam Bankman-Fried’s father Joe Bankman urged Sam Bankman-Fried and others to make Friedberg central and to have Friedberg ‘in the know…so we only have one person in control of everything.'”
It is alleged that Friedberg paid “hush money” to two potential whistleblowers to prevent them from disclosing information about “regulatory issues” and a so-called close relationship between FTX and Alameda.
The lawsuit alleges that in one instance, Friedberg paid money to a whistleblower “to bribe, or otherwise ensure their silence” and hired a lawyer for a whistleblower.
In this 40-page document, FTX makes 11 civil claims, including alleging that Friedberg breached his fiduciary duty and authorized a series of fraudulent transfers and “loans” to other former FTX executives.
According to the lawsuit, Friedberg received $300,000 in salary, $1.4 million in signing bonuses, an additional $3 million in cash bonuses, 8% ownership of FTX US, and “cryptocurrency worth tens of millions of dollars” during his 22-month tenure at the exchange – FTX is seeking to recover all of these losses.
Some parts of the complaint, particularly those related to compensation for whistleblowers, have been redacted.
An example of a redacted portion of the complaint related to one of the whistleblowers. Source: Kroll
In an incident that occurred in March 2022, Friedberg provided an “unusual settlement” to a female FTX US employee named “Whistleblower-1” who had worked at the US exchange for “less than two months” and earned $200,000 in salary.
FTX also claimed that, following the settlement, it initiated a $12 million transaction to hire the Lawyer-1 of the whistleblower.
The lawsuit states: The settlement was in response to a demand letter from Whistleblower-1, which claimed “Alameda is nothing more than an extension of FTX, used to enhance investor confidence in FTX projects and thereby boost the prices of projects developed or invested in by FTX.”
FTX edited the amount paid to Whistleblower-1. Source: Kroll
The former employee also alleged that “details about the company’s fundraising and various projects were publicly disclosed on Slack,” which they claim allowed “all attending employees to trade based on this information before it was publicly announced.”
The complaint alleges that following the settlement, Friedberg contacted the law firm on behalf of “Whistleblower-1” and signed an agreement to hire them at a cost of “more than $200,000 per month for five years,” despite “no real need” for these services.
FTX reportedly fired a lawyer who worked for Alameda and was referred to as “Whistleblower-2” in another case because they “began to be concerned about governance and regulatory issues within the company.”
FTX claimed that the person worked at Alameda for less than three months but they still received a severance package, which has been modified in the filings.
FTX’s restructuring chief, John Ray, said in a report on June 26 that an unnamed senior lawyer “assisted and covered up” the mixing of client funds.
On the same day, The Wall Street Journal cited people familiar with the matter as saying the unnamed lawyer was Daniel Friedberg.
Friedberg was also named as providing information to investigators at the U.S. Attorney’s Office.
In addition, a collective lawsuit against celebrities accused of promoting FTX also noted that evidence provided by Friedberg could counter some defendants’ key defenses.
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